The legality of Homeowners’ Association (HOA) dues collection in the Philippines is a frequent point of contention. Many homeowners wonder: If our HOA’s registration with the Securities and Exchange Commission (SEC) has expired, or if they haven’t updated their records with the Department of Human Settlements and Urban Development (DHSUD), do I still have to pay?
To understand the answer, one must look at Republic Act No. 9904, also known as the Magna Carta for Homeowners and Homeowners' Associations, and its Implementing Rules and Regulations (IRR).
1. The Jurisdiction: From SEC to DHSUD
Historically, HOAs were registered with the SEC. However, with the passage of RA 9904 and the subsequent creation of the Department of Human Settlements and Urban Development (DHSUD), the powers of the SEC over HOAs were transferred.
- Registration is Mandatory: For an HOA to have a "juridical personality"—the legal right to sue, enter into contracts, and collectively own property—it must be registered.
- The Transition: Even if an HOA was originally SEC-registered, it is now required to be registered/re-registered and regulated by the DHSUD (formerly the HLURB).
2. Can an "Inactive" HOA Collect Dues?
The short answer is: An association must be in "Good Standing" to exercise its full legal powers.
If an HOA fails to file its General Information Sheet (GIS), financial statements, or fails to renew its registration, it may be labeled as delinquent or revoked.
Consequences of Lack of Authority:
- Loss of Juridical Personality: If the registration is revoked or expired, the HOA technically loses its legal existence. It cannot validly issue receipts in its name or sue a homeowner for "collection of sum of money."
- No Legal Standing to Sue: A "defunct" HOA cannot file a case in court or with the DHSUD to compel payment because it has no legal "personality" to appear as a plaintiff.
- Invalidity of Board Actions: If the Board of Directors was not elected according to the bylaws or if their term has expired without a valid hold-over provision, their acts (including the resolution to increase or collect dues) may be challenged as ultra vires (beyond their power).
3. The "Unjust Enrichment" Argument
While the lack of registration prevents the HOA from suing you effectively, there is a legal nuance. In Philippine law, the principle of "Unjust Enrichment" (Article 22 of the Civil Code) prevents a person from benefiting at the expense of another.
Even if an HOA is unregistered, if they are providing essential services (security, garbage collection, street lights, water maintenance), a court might still rule that homeowners are liable for their fair share of those specific expenses. However, this is usually settled through a civil case rather than the summary procedures available to registered HOAs.
4. Rights and Defenses of the Homeowner
If you believe your HOA is collecting dues without proper authority, you have several avenues for redress:
Verification of Status
You can request a Certificate of Good Standing from the DHSUD. This document confirms whether the HOA has complied with all reportorial requirements and whether its Board of Directors is officially recognized.
Challenging the Board
If the HOA is collecting dues but the Board’s term has expired and no elections have been held for years, the collection can be questioned. Under the law, a "hold-over" capacity is generally allowed, but it cannot last indefinitely to avoid democratic elections.
Where to File a Complaint?
The DHSUD has original and exclusive jurisdiction over disputes involving:
- The legality of the HOA’s organization.
- The validity of the election of directors/officers.
- The legality of dues and assessments.
5. Summary Table: Impact of Registration Status
| HOA Status | Authority to Collect Dues | Authority to Sue for Non-payment |
|---|---|---|
| DHSUD Registered & Active | Fully Authorized | Yes, via DHSUD |
| SEC Registered (Legacy) | Questionable (Must transition to DHSUD) | Weak; may be dismissed for lack of personality |
| Revoked/Expired | None (Technically dissolved) | No |
| Unregistered | Informal (Voluntary basis only) | No |
Final Legal Note
While a lack of registration is a valid defense against a formal collection suit, it does not necessarily exempt a homeowner from the moral or equitable obligation to pay for services they actually consume. However, for an HOA to legally enforce its rules and fees, it must be a corporation in good standing with the DHSUD.
Important: Before withholding dues, it is advisable to verify the HOA's status through the DHSUD Regional Office and consult with a legal professional to avoid being declared a "delinquent member," which carries its own set of penalties under RA 9904.
Would you like me to draft a formal letter to a Homeowners' Association requesting proof of their DHSUD Registration and Certificate of Good Standing?